Lebanon grapples with expo deadlock amid Syrian war

08/16/2015 - 15:59 PM

The Lebanese government has approved a subsidy to help export companies after the closure of the Jordan-Syria border.

Beirut, Lebanon - During a heated meeting last month, the Lebanese government agreed to subsidise the shipping of agricultural goods by sea, three months after the closure of the Syrian-Jordanian border.

Before the war in Syria, exported goods from Lebanon would travel through Syria towards Iraq and Turkey. But passage to both countries has been closed since the outbreak of violence.

The subsidy decision, aimed at easing the economic pressure on Lebanon's struggling agricultural sector, has helped to relieve the export deadlock in effect since Syrian opposition fighters overran the Nassib border crossing on April 1.

The Nassib crossing was the last available border crossing for land exports from Lebanon, and though there are no reliable figures on what percentage of agricultural exports passed through Nassib, Jordan and the Gulf Cooperation Council (GCC) countries accounted for more than 60 percent of these goods, according to the Investment Development Authority of Lebanon.

The $21m subsidy will pay shipping companies the difference in cost of exporting by land and by sea. The measure will be in effect until December.

According to Imad Riachy from the agriculture company Greenette, which mainly cultivates iceberg lettuce, the extra cost of exporting by sea is between 15 and 30 percent higher.

The proposal's promoter, Lebanese agriculture minister, Akram Chehayeb, said that before its approval, 900 tonnes of agricultural produce were being thrown out daily due to the deadlock.

The agricultural sector, which makes up5.5 percentof Lebanon's gross domestic product (GDP) and 14.4 percent of total exports, has been deeply affected by the export deadlock.

Justthree regional countriesreceive more than one-third of the vegetables and fruits exported, and the only way for trucks to reach the area covering Jordan and the GCC is through Syria, the only country that has an open border with Lebanon.

The subsidy measures could prove essential for a sector that employs 20 to 30 percent of the Lebanese workforce.

Yet despite the July 2 approval of the proposal, not everybody in Lebanon's agriculture sector is confident.

"I don't really know when the government will start funding the export of vegetables," Riachy said. So far, he has been paying the costs of weekly shipments to the Gulf.

Surrounded by stacks of papers and files at his office in Beirut, Riachy has been looking for alternatives in recent months, as 90 percent of Greenette's crop is intended for export.

"Compared to last year, we are now exporting roughly 10 percent of what we used to," he explained.

As a result, Riachy reduced the amount of land his company cultivates, and switched parts of it to grow longer-lasting, but less profitable vegetables, such as potatoes.

The consequences of the export deadlock are affecting people working in other sectors, too.

In a car park in Bar Elias, a town in the Bekaa Valley, Walid Tarraf approached one of the 50 dusty trucks that have been immobilised since April 1. "Around here, you can find 10 more parking lots like this one," he said.

The 46-year-old Tarraf has spent half of his life driving trucks from Lebanon to the GCC countries, barely seeing his wife and four children for more than 10 days each month. Now, he sits at home jobless and worries about their meagre savings.

"I had $6,000 when the crisis started, and now I just have $1,500," he explained. "We had to cut expenses on everything, such as clothes, food, and other daily products."

He recently had to take out a loan in order to make the $600 per month payment on another loan for his refrigerated truck, which cost $100,000.

"All the truck drivers are in despair. We just want alternatives to stay alive," said Tarraf, who was stuck in Saudi Arabia for 46 days when the Jordanian-Syrian border was shut. He remained there until an agreement was struck with the Lebanese government, which paid $1m to bring back drivers together with their nearly 300 trucks.

One-third of the 4,500 trucks in Lebanon that operate on international routes are refrigerated, which are the kinds needed to export vegetables.

However, some like Ayman Halawi, a member of the Lebanese Refrigerated Trucks Owners (LRTO) syndicate, claim that the actual problem goes beyond the sector.

Farmers who cultivate land, engineers who provide the machines needed, the mechanics fixing the trucks, and the clearance companies that value the goods at the border are all suffering the consequences of the export deadlock.

Last month, the LRTO had organised a protest to pressure the government into taking measures to subsidise the export of agricultural goods. Their gathering cut the Beirut-Damascus road for an hour. Another protest, days later, brought together employees from clearance companies and farmers, in addition to truck drivers.

"We will increase the level [of the protest] if nothing is done," Halawi said.

The LRTO met with Lebanese Prime Minister Tammam Salaam in June and gave him a list of demands to resolve the situation. The main demand was to press the United Nations to secure a route through Syria from Lebanon's Bekaa Valley to Jordan.

Shipping vegetables by sea is the only feasible alternative to getting Lebanese products to market. But even with the subsidy in place, which would cover the increased costs of shipping by sea, other issues remain.

"The biggest issue is flexibility," explained Riachy. "Fresh vegetables, as the ones we cultivate, expire after 14 or 15 days of the harvest, and the trucks facilitate a faster shipping of goods."

From the moment vegetables are loaded into shipping warehouses, it takes five to seven days for trucks to reach their destinations in the Gulf.

"The constraint with ships is that you need to plan the shipment in advance, [and] to have a Ro-Ro ready for the departure as soon as the vegetables are collected," Riachy said.

Ro-Ros are vessels designed to carry wheeled cargo, such as trucks. It takes three days for Ro-Ros to travel from Lebanon to Jeddah, Saudi Arabia.

The trucks on board must then embark on a second leg of their journey to the destination country, which can take up to two more days.

But what makes the difference are the "very high prices" that erase any benefit, Halawi said. And with only one Ro-Ro a week leaving Lebanon, agricultural companies cannot export fresh vegetables, as the goods would have to wait at a warehouse and could expire.

Another problem arising from shipping by sea is the excess of supply.

So far, there has been only one ship leaving Lebanon each week carrying export technological and industrial goods, flooding GCC markets with goods on the day of arrival.

Unloading all the cargo at once drives prices down. When goods arrive by truck, prices are higher because shipments are not as big.

The new subsidy would allow the shipping of goods every day.

"The price shrinks because the offer exceeds the demand. So does your profit," said Riachy, who has slowly built a market in the GCC since establishing Greenette 12 years ago. "We are losing our share in just three months, and other companies from different countries are replacing us."

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